Indiana's Retail Gaming Remains Unaffected by Online Casinos, Reveals Recent Study

Quick Intro

Spectrum Gaming Group, commissioned by the Indiana Gaming Commission, has completed an in-depth analysis indicating that the launch of online gambling in Indiana would not significantly harm the state’s retail casino market. This study aims to address concerns that digital casinos might undercut physical casinos’ revenues.

Spectrum’s comprehensive review concluded that while online casinos might slow the growth of retail casinos, they won’t cause financial harm. This follows a similar study conducted in 2022, with the latest one incorporating recent developments in the online gambling sector.

Indiana’s Online Casinos: Minimal Impact on Traditional Gaming

Spectrum’s research evaluated the influence of online gaming on four major sectors: retail casinos, digital sports betting, the lottery, and horse racing. The study drew comparisons with the online gambling markets in Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia to predict the potential impact on Indiana.

The report highlights:

“Our analysis of iGaming in various states shows no significant detrimental effects on other gaming forms. However, it indicates that iGaming might be slightly limiting the regular growth of retail casino revenues.”

Retail Casinos’ Resilience in the Face of Online Gaming

Concerns about online casinos ‘cannibalizing’ retail casino revenue were central to the study. However, Spectrum’s findings suggest that retail casinos in states like Delaware, New Jersey, Pennsylvania, and West Virginia experienced revenue growth in 2023 compared to 2019, despite the presence of online casinos. Although Michigan and Connecticut saw declines, the overall revenue growth across these six states was 0.7%.

Considering these mixed results, Spectrum believes that Indiana’s retail casinos will not suffer significant losses due to the introduction of online gaming, especially given the state’s similarities to those where retail revenue grew alongside online casino launches.

Regarding sports betting, Spectrum observed that online casinos and sportsbooks often share platforms, creating “revenue synergies.” The study found that bettors using both online casinos and sportsbooks tend to wager more than those using either platform exclusively. Consequently, Indiana’s sports betting industry is unlikely to be negatively impacted by online casinos; it may even see a boost.

As for the lottery and horse racing sectors, Spectrum’s research suggests that online casinos will not adversely affect these industries either.

Projected Growth of Online Casino Revenues in Indiana

Spectrum’s revenue projections for Indiana’s online casinos are optimistic. Using three different models, the firm estimates that online casino revenue could grow from $489 million in the first year to $696 million in the second and $880 million in the third year. This would total approximately $2.1 billion over three years, placing Indiana behind the leading iGaming states of Michigan, New Jersey, and Pennsylvania.

The potential tax revenue from these online casinos is also significant:

  • At a 20% tax rate, revenue could reach around $413 million over three years.
  • A 30% tax rate might yield $619 million.
  • A 45% tax rate could bring in nearly $1 billion.

The Road to Legalizing Online Casinos in Indiana

The findings of Spectrum’s “Prospective Internet Casino Gaming In Indiana” report are a boon for iGaming supporters in the state. This second study in two years should help alleviate concerns within the retail casino industry. However, Indiana legislators are unlikely to consider legalizing online gambling until 2025, partly due to apprehensions stemming from a 2019 scandal involving illegal campaign contributions by a gaming operator.

The Broader Implications of Indiana’s Online Gambling Study

The Spectrum Gaming Group’s study on the potential impact of online gambling in Indiana offers broader insights into the evolving landscape of the gambling industry. It highlights the resilience of traditional gaming sectors in the face of digital expansion and underscores the potential for harmonious coexistence and mutual growth of both online and retail gambling avenues. This study sets a precedent for other states contemplating similar expansions, demonstrating that online and traditional gaming can synergistically contribute to the industry’s overall health.

Final Thoughts

The Spectrum Gaming Group’s study provides reassuring insights for Indiana’s gambling industry, suggesting that the introduction of online casinos will not significantly harm retail operations. The projected revenue growth and the potential for substantial tax income present a compelling case for the legalization of online gambling in Indiana, despite legislative hesitations. This study serves as an important reference for understanding the complex dynamics between digital and traditional gaming platforms.

Source: https://www.in.gov/igc/files/Spectrum-Report-for-Indiana-Gaming-Commission-2023-Final.pdf